Ford's Mulally Can Go Out on Top, Like Delta's Grinstein

DETROIT ( TheStreet) -- One big thing left for Alan Mulally to do at Ford ( F) is this: Be sure to go out on top.

Perhaps the airline industry, Mulally's customer during his 37 years at Boeing ( BA), can provide some guidance. In the past four years, the CEOs at the three biggest U.S. airlines have departed, under widely varying circumstances.

One, Delta's ( DAL) Jerry Grinstein, defined the model, leaving at the height of his popularity and success. Like Mulally, Grinstein was a CEO who did exactly what he set out to do -- fix one of the world's best-known companies -- and also won extraordinary support from employees, analysts and the media.

The restoration of Ford's dividend last week was the latest symbol of Mulally's success. He arrived five years ago and, with the automaker bleeding, he quickly suspended the dividend. Then he brought it back.

That could easily have provided a dramatic departure moment, and in fact, Mulally departure chatter in recent weeks has risen. On Tuesday, Mark Fields, Ford's president of the Americas, told The Detroit News that Ford is not looking outside for a successor, but "throughout our company, it is very important that we develop succession plans in all levels of the company.

"Alan is not going anywhere anytime too soon," Fields added.

Mulally is 66, which has fueled the chatter. But that might mean nothing: Grinstein left Delta at 74.

Unlike Mulally, Grinstein led his company into bankruptcy.

In an industry where bankruptcies have been the rule, rather than the exception, Delta's may have been the most successful. Grinstein, who took over as CEO in 2004, used bankruptcy not only to reduce costs, but also to transform Delta from an underperforming regional airline into an efficient global one.

Grinstein enhanced his image with extremely unusual conduct: He gave up millions in compensation. He consistently took one of the airline industry's lowest CEO salaries, earning $338,000 in his final year. He also asked that additional compensation, which he could have expected, be donated to two funds -- one to assist Delta employees in need and one to provide scholarships for employees' children.

At a ceremony in the Atlanta airport in May 2007, on the day that Delta regained its listing on the New York Stock Exchange, hundreds of employees repeatedly chanted "Jerry" and some asked for the CEO's autograph. Grinstein left a few months later, providing a particularly appropriate quotation, here paraphrased, "There's lots of wine to drink and lots of art to see."

At United ( UAL), Glen Tilton presided over a successful bankruptcy and a 2010 merger with Continental. He served as CEO from 2002 to 2010 and is now chairman.

Like Mulally, Tilton left a 30-year career in one industry to lead a turnaround in another. He put in 30 years at Texaco. Unlike Mulally, Tilton was not popular with employees and didn't embrace reporters.

However, Tilton clearly succeeded in his assignment, and he was well compensated for that. An example is his departure package, valued at $16.8 million, including a $2.7 million discretionary bonus. About a third of the package was in stock, not yet vested, that has declined in value by about $1 million.

At American parent AMR ( AMR), a six-year CEO left last month as the carrier entered bankruptcy.

Gerard Arpey distinguished himself as a moral man. He opposed bankruptcy on moral grounds. But by retiring, even after the board asked him to stay, he forfeited any shot at a severance package or long-term incentives.

But American still requires a turnaround. And ironically, although Arpey sought to avoid bankruptcy in which employee salaries and benefits are bound to be reduced, many employees were not fond of him. For proof, just check the comments on this story, written the day AMR filed for bankruptcy and Arpey retired.

Of the three paths, the one paved by Grinstein appears closest to the one traveled by Mulally. That path has idolization at the end of it. But it is worth remembering that corporation's lives, like people's lives, have ups and downs. Mulally's final corporate decision -- regarding the timing of his departure -- could be among his most important.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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